Investors interested in stocks from the Internet - Software sector have probably already heard of Definitive Healthcare Corp. (DH) and BlackLine (BL). But which of these two stocks offers value investors a better bang for their buck right now? We'll need to take a closer look.
There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. The proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Right now, Definitive Healthcare Corp. is sporting a Zacks Rank of #2 (Buy), while BlackLine has a Zacks Rank of #4 (Sell). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that DH is likely seeing its earnings outlook improve to a greater extent. But this is just one factor that value investors are interested in.
Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether a company is undervalued at its current share price levels.
The Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.
DH currently has a forward P/E ratio of 18.10, while BL has a forward P/E of 24.14. We also note that DH has a PEG ratio of 1.98. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. BL currently has a PEG ratio of 3.51.
Another notable valuation metric for DH is its P/B ratio of 1.37. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, BL has a P/B of 7.75.
These are just a few of the metrics contributing to DH's Value grade of B and BL's Value grade of D.
DH is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that DH is likely the superior value option right now.
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Definitive Healthcare Corp. (DH): Free Stock Analysis Report BlackLine (BL): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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